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MPRA Paper No. 12249, posted 17. December 2008 / 23:37
A Systematic Analysis of the Preference Change
in Co-branding
1
Bielefeld Graduate School of Economics and Management (BiGSEM)
2
Department of Business Administration and Economics
December 2008
Phone: +49(0)521-106-4862
E-Mail: clee1@wiwi.uni-bielefeld.de
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A Systematic Analysis of the Preference Change in Co-branding
Chia-Lin Lee and Reinhold Decker
Abstract
This paper presents current theoretical and empirical findings on consumers’ preference change in
co-branding. We develop a conceptual model to illustrate consumers’ attitudinal changes in
co-branding based on the findings of Park et al. (1996) and Simonin and Ruth (1998), among others.
We argue that the attitude change is influenced by three important effects, namely the extension effect,
the mutual effect, and the reciprocal effect. It is shown how the interaction of these effects can be used
to systematically explain the rationale behind preference change in co-branding. So, our study takes an
initial step toward the understanding of the connection between consumer evaluation and the success
of alliance formation for adapting the Venkatesh et al. (2000) model. Finally, we provide suggestions
for marketing managers and motivate the need for further research in the field of strategic marketing.
1. Introduction
Most firms nearly always search for potential growth opportunities in the market they serve.
One effective way is co-branding. Co-branding can avoid the possible failures derived from
over-leveraging the equities of existing brands (Swaminathan et al., 2001; James et al., 2006)
and can reduce the introduction cost of new products (Kotler and Keller, 2006). Examples of
co-branding include the Oral-B Rembrandt whitening pen, the Sony-Ericsson mobile phone,
and the NutraSweet sweetener in Diet-Coke. In the optimal case, co-branding strategies make
use of the salient attributes of the allying1 brands and offer opportunities for both players to
reach a new market. However, the existence of a co-branding alliance can also cause an en-
dogenous competition on consumer preferences (i.e., some consumers may change their pref-
erences from one of the partnering brands to the other).
Venkatesh et al. (2000) argue that the occurrence of preference change is crucial because it
influences the success of forming a co-branding alliance. However, their analysis totally ig-
nores an important issue behind preference change, namely the consumers’ evaluation of
co-branding, which is a major topic in co-branding research (see Park et al., 1996 and Si-
monin and Ruth, 1998). Therefore, the aim of this paper is to analyze preference change by
relating it to the overall evaluation process (i.e., to perceptions and attitudes). To our knowl-
edge, this study is the first one to provide a systematic analysis of preference change in the
context of co-branding.
The remainder of this paper is organized as follows. Section 2 provides some definitions
and a brief review of the co-branding literature. Section 3 summarizes previous findings on
consumers’ attitude change by means of a conceptual model. Section 4 offers a systematic
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analysis of consumers’ preference change and applies the results in a three-brand scenario.
Section 5 concludes the paper with some discussions and a short outlook on future research
directions.
Brand A Brand B
Brand Brand
Extension Extension
Co-brand (AB)
(Introduction of a new co-branded product)
S1: A good (poor) product and brand fit results in a positive (negative) mutual effect and
yields a favorable (unfavorable) attitude toward the co-brand.
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ward a brand. In addition, a significant prior experience can be used as a measure to represent
a higher level of brand loyalty (Swaminathan et al., 2001).
Several scholars have also argued that the prior attitude plays an important role in the eval-
uation process of co-branding (Simonin and Ruth, 1998; Boo and Mattila, 2002; Lafferty et al.,
2004).4 Among these studies, Simonin and Ruth (1998) claim that the prior attitude toward
one of the partnering brands is positively related to the consumer’s attitude toward the
co-brand and the post-exposure attitude toward that brand. Since co-branding is one type of
brand extension, we term the influence resulting from the prior attitude the “extension effect”.
Thus, the following two statements can be written down:
S2: A favorable (unfavorable) prior attitude toward one of the partnering brands results in a
positive (negative) extension effect and yields a relatively favorable (unfavorable)
post-exposure attitude toward that brand.
S3: A favorable (unfavorable) prior attitude toward one of the partnering brands results in a
positive (negative) extension effect and yields a relatively favorable (unfavorable) attitude
toward the co-brand.
S4: A favorable (unfavorable) attitude toward the co-brand results in a positive (negative) re-
ciprocal effect and yields a relatively favorable (unfavorable) post-exposure attitude to-
ward each of the partnering brands.
In conclusion, the process of attitude change can be described as follows: The extension
effect and the mutual effect have direct impacts on consumers’ attitudes toward the co-brand
(cf. S1 and S3). The post-exposure attitude toward each of the allying brands will be affected
by both the extension effect and reciprocal effect (cf. S2 and S4). Therefore, the possibility that
a consumer will change her/his brand attitudes toward each of the partnering brands after the
alliance will depend on the strength of the interactions of the considered effects. Figure 2 vi-
sualizes this process.
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Figure 2: A conceptual model of attitude change in co-branding
Prior attitude Prior attitude
Brand A Brand B
S2 S3 S3 S2
S4 S4
Post-exposure attitude Post-exposure attitude
Brand A Brand B
Besides, the considered market is assumed to comprise several market segments. The con-
sumers belonging to one segment prefer one specific brand. At the first point of time, we ca-
tegorize the segments into two groups: One group is composed of those segments preferring
the partnering brands (segment A and B) and the other includes the segments preferring the
competing brands (segment Y and Z). Since the rationale of preference change is identical for
each of the segments in the same group, we only focus on the process of preference change in
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segment A and Z in the next sections.
Co-brand AB
A1
A2 A3
4.1.1 Route A1
We argue that a certain fraction of the consumers in segment A have a stable preference at
time t = 2. This stable preference results from their extremely favorable prior attitude toward
brand A. In other words, a significant positive extension effect (according to S2) dominates the
evaluation process. Two supporting arguments are provided below.
The first argument is related to brand familiarity, which can be defined as “the number of
product-related experiences (product usage) that have been accumulated by consumers” (Alba
and Hutchinson, 1987). Based on this definition, those consumers with an extremely favorable
prior attitude toward brand A also have a significant prior purchase experience regarding this
brand.5 Since brand familiarity can positively moderate the impact of prior attitude on
post-exposure attitude (Simonin and Ruth, 1998), a high level of brand familiarity will lead to
stable preferences.
The second argument is related to brand loyalty. A favorable prior attitude implies brand
loyalty (Dyson et al., 1996). Those consumers who have an extremely favorable prior attitude
toward brand A can be assumed to be completely loyal to this brand. It is commonly recog-
nized that brand loyalty is highly resistant to change (Blackwell et al., 2005). Therefore, the
respective consumers are the most unlikely to change their brand attitudes after experiencing
the co-branded product AB, because they will ignore the potential inconsistent information
and defend their well-established attitudes (Smith and Mackie, 2007). Therefore, an extremely
favorable prior attitude toward brand A results in a stable preference.
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well-established attitude toward brand Z. Hence, these consumers’ preferences are stable
(route Z1). Besides, some members of segment Z are not aware of co-brand AB and may shift
their preferences to one of the remaining (but not explicitly considered) brands named Y in
our example due to variety seeking (route Z2).
t=1 Segment Z
Co-brand AB Z1
Z5
Z3 Z2
Z4
5. Conclusion
5.1 Discussions
The incentive for a company to form a co-branding alliance is to gain an “added value”
from the partnership. This “added value”, among others, can consist of the opportunity for one
of the partnering brands to build up its brand awareness at the other’s customer base
(Kippenberger, 2000; Leuthesser et al., 2003). For instance, the co-branded credit card
Citibusiness / AAdvantage not only enables American Airlines (AA) to build up its brand
awareness in Citibank’s customer base but also provides an opportunity for Citibank to gain
more transactions from flight tickets purchased by AA’s customers who want to save the extra
miles.
However, if the above example is presented in the same product category, Venkatesh et al.
(2000) argue that the added value could cause consumers’ preference change (shift-in prefer-
ence) and the subsequent endogenous competition on consumer preferences. Finally, the alli-
ance may end up because of one brand’s loss in preference share. Hence, the preference
change plays an essential role in analyzing the success of alliance formation. This analysis
provides the grounds of preference change and takes an initial step toward the understanding
of the connection between consumer evaluation and alliance success (e.g., for adapting the
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Venkatesh et al. (2000) model).
Endnotes
1. We use allying brands and partnering brands interchangeably.
2. Information integration (Anderson, 1981), attitude accessibility (Fazio, 1989), and context ef-
fect (Lynch et al., 1991) provide a meaningful foundation to illustrate consumers’ attitude
change in co-branding.
3. Here, the term “attitude change” refers to the changes of existing attitudes toward the parent
(partnering) brands.
4. Lafferty et al. (2004) examine the prior attitude in a cause-brand alliance.
5. As already mentioned, the prior attitude can be measured by prior purchase experience (see
Swaminathan, 2003).
6. This implies that the degree of favorability of brand A is lower than other brands and thus the
rank order is changing.
7. This result is a logical consequence of the preceding reasoning. Since the consumers’ initial
preference is brand Z and their attitude toward brand A (B) is diluted at time t = 2, they will
definitely not stay with brand A (B).
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